As Introduced 1
123rd General Assembly 4
Regular Session H.B. No. 78 5
1999-2000 6
REPRESENTATIVES WOMER BENJAMIN-CALLENDER-MOTTLEY-FORD 8
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A B I L L
To amend sections 1151.38, 1151.61, 1701.04, 11
1701.06, 1701.09, 1701.11, 1701.13, 1701.15, 12
1701.18, 1701.24, 1701.33, 1701.45, 1701.59, 13
1701.63, 1701.70, 1701.71, and 1701.95, to enact 14
new section 1701.10, and to repeal section 15
1701.10 of the Revised Code to modify the General 16
Corporation Law, including modifications to alter 17
the requirements for the formation of a 18
corporation, including the contents of the 19
articles of incorporation, the terms of and 20
subscription for shares, and the adoption of 21
corporate regulations; to limit the liability of 22
directors for improper dividends, distributions, 23
purchases, and redemptions of shares; to limit 24
the indemnification of directors; to specify 26
limits on pre-emptive rights of shareholders; to 27
specify the rights of fractional shareholders; to 28
specify the liability of shareholders to the
corporation and its creditors; to specify the 29
determination of the date for measuring the 31
effect of a dividend or distribution on a
corporation; to specify a record date for 32
determining the eligibility of shareholders for a 33
dividend or distribution; to permit a reduction 35
in the size of executive and other committees of 36
directors; to specify the authority of
incorporators, initial directors, and subsequent 37
directors of a corporation to amend the articles 39
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of incorporation; and to make nonsubstantive
technical modifications to the law. 40
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 42
Section 1. That sections 1151.38, 1151.61, 1701.04, 44
1701.06, 1701.09, 1701.11, 1701.13, 1701.15, 1701.18, 1701.24, 45
1701.33, 1701.45, 1701.59, 1701.63, 1701.70, 1701.71, and 1701.95 46
be amended and new section 1701.10 of the Revised Code be enacted 47
to read as follows: 48
Sec. 1151.38. In AS USED IN this section, "federal 57
association" means a federal savings and loan association, and 59
"state association" means a building STATE SAVINGS and loan 60
association.
Any federal association having its home office in this 62
state may convert or reorganize into a state association under 63
this section and section 1151.39 of the Revised Code, by 64
proceeding as follows: 65
(A) The board of directors of the federal association, at 67
any regular or special meeting called for that purpose, shall 68
adopt a plan to convert or reorganize into a state association. 69
(B) Such THE plan and any amendments or additions thereto 72
TO THE PLAN shall be considered, and a vote shall be taken on the 73
question of its adoption, at an annual meeting of the members of 74
the federal association, or at any special meeting of the members 75
of the federal association called to consider such THE action. 76
If the bylaws of the federal association do not require written 77
notice of such THE annual or special meeting, written notice of 78
the time, place, and purpose of such meeting shall be mailed by 80
the federal association, postage prepaid, at least ten days prior 81
to the date on which such meeting convenes, to each member of 82
record of the federal association, but such THE mailing shall not 83
be a condition precedent to, nor shall any defect in such THE 85
mailing affect the validity of, any such THE meeting. The 87
adoption of such THE plan shall require the vote of fifty-one per 89
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cent or more of the votes cast by the members present in person 90
or by proxy at such meeting.
(C) Two copies of the minutes of such meeting, together 92
with a statement showing the giving of such THE WRITTEN notice, 93
and two copies of the minutes of the meeting of the members of 94
the board of the federal association, all verified by an 95
affidavit of the secretary or other proper custodian of the 96
records of the federal association, shall be filed both in the 97
office of the superintendent of building and loan associations 98
FINANCIAL INSTITUTIONS and with the federal home loan bank board. 100
Such verified copies, when filed, shall be presumptive evidence 101
of the holding and action of such meeting. 102
(D) A majority of the members of the board of the federal 104
association, which majority shall consist of not less than three 105
directors, a majority of whom are citizens of the United States, 106
shall subscribe to, acknowledge, and file articles of 107
incorporation in the office of the secretary of state. Two 108
copies of the articles shall be filed with the federal home loan 109
bank board. The articles shall set forth ALL OF THE FOLLOWING: 110
(1) All statements required by paragraphs DIVISIONS 113
(A)(1), (2), AND (3), and (4) of division (A) of section 1701.04 114
of the Revised Code and any desired provision authorized by 115
paragraphs (1) DIVISIONS (B)(3), (2) (4), and (3) of division (B) 116
(5) of such THAT section; 117
(2) A statement showing that the state association is 119
incorporated by conversion or reorganization from the federal 120
association; 121
(3) A statement showing the assumption by the state 123
association of all shares, accounts, and liabilities of the 124
federal association as of the date on which the conversion or 125
reorganization is to be completed, and the manner in which each 126
class of such shares, accounts, and liabilities will be 127
discharged or adjusted by the state association. 128
Upon receipt of the articles, the secretary of state shall 130
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forthwith transmit to the superintendent a copy of such THE 131
articles. If it appears that the state association, if formed, 132
will be entitled to commence the business for which it is 133
organized, the superintendent shall so certify to the secretary 134
of state, who shall thereupon record such THE articles UPON THAT 135
CERTIFICATE. 136
(E) On the day and hour of such recording, the federal 138
association shall be deemed converted or reorganized into the 139
state association, and thereupon UPON THAT CONVERSION OR 140
REORGANIZATION, BOTH OF THE FOLLOWING APPLY: 141
(1) All the federal association's property and assets, and 143
every right, privilege, and interest then existing, belonging or 144
pertaining to it or which would inure to it, shall immediately, 145
without any conveyance or transfer and without any further act, 146
SHALL be vested in and become the property of the successor state 147
association, which shall hold and enjoy them in its own right, to 148
the same extent as they were held and enjoyed by the federal 149
association. All liens upon the property and assets of such THE 150
federal association existing at the time of conversion shall be 151
preserved unimpaired and limited in lien to the property or 152
assets then affected thereby BY LIENS. This section does not 153
deprive any person, firm, or corporation of any substantive right 155
existing at the time of such conversion against such THE federal 156
association, nor of the right to enforce any such right OF THAT 158
NATURE by proceedings against the property and assets transferred 160
by operation of this division, in the event and to the extent 161
that such THE substantive right is not satisfied or adjusted by 162
the successor state association in accordance with its articles. 163
(2) The state association shall commence business and 165
shall be subject to the laws of this state relating to domestic 166
building SAVINGS and loan associations. 167
Any action or proceeding pending by or against such THE 169
federal association at the time of such THE conversion or 170
reorganization may be prosecuted to judgment, with right of 172
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appeal, as in other cases, as if such THE conversion or 173
reorganization had not taken place, or the successor state 174
association may be substituted for such THE federal association. 175
A copy of the articles recorded in the office of the 177
secretary of state, certified by the secretary of state under the 178
seal of his THE SECRETARY OF STATE'S office and showing the day 179
and hour of recording, shall be recorded in the office of the 181
county recorder of the county in which the federal association 182
had its principal office or place of business at the time of its 183
conversion or reorganization, and in each county in the state in 184
which such THE federal association owned real estate at the time 185
of its conversion or reorganization, for which recording the 186
recorder shall charge the same fees as for the recording of 187
deeds. Two copies of the articles, as so recorded and certified, 188
and showing the date and hour of such THE recording, shall be 189
filed with the federal home loan bank board. 190
Sec. 1151.61. A building SAVINGS and loan association may 199
be reorganized, with the written consent of the DEPUTY 200
superintendent of building SAVINGS and loan associations, in the 201
following manner:
(A) The board of directors may adopt a plan of 203
reorganization, which may include any change in the articles of 204
incorporation, including changes of issued or unissued shares, 205
which could be effected by amendment to the articles, except as 206
otherwise provided in this section; the increase or reduction of 207
the authorized capital stock, the stock credits, and the fully 208
paid and issued capital stock; the determination or 209
redetermination of the fair value to the association of its 210
assets, tangible or intangible ASSETS; the allotment of a part of 212
the amount so determined or redetermined to stock credits and to 213
fully paid and issued capital stock, and a part to the reserve 214
fund; the retention as reserve and undivided profits of any of 215
the existing reserve and undivided profits; the manner, terms, 216
and basis of converting or exchanging shares; and such ANY other 217
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details as THAT the board considers necessary or desirable. The 219
board shall not adopt, and the superintendent shall not approve, 221
any plan which THAT, by amendment to the articles or otherwise, 222
changes the purpose of the association from that of a building 224
SAVINGS and loan association within the meaning of section 226
1151.01 of the Revised Code. 227
(B) A special meeting of the stockholders shall be called, 229
of which notice shall be given to each stockholder at his THE 230
STOCKHOLDER'S last known post-office address as it appears on the 232
records of the association, whether or not he THE STOCKHOLDER is 233
entitled to vote. At such meeting, the plan of reorganization, 235
including any amendments of or additions to the plan proposed at 236
such THE meeting, shall be considered, and a vote shall be taken 237
on the question of its adoption. The adoption of such THE plan 238
requires the vote, in person or by proxy, of the holders of 239
fifty-one per cent of the stock. If the plan so provides, the 240
board may, within forty-five days after the day on which such THE 241
vote is taken, MAY rescind the action of the shareholders if in 243
its judgment the consummation of the plan will be against the 244
best interests of the association because of the number of 245
dissenting shareholders or the amount of stock owned by them. 246
(C) All shareholders dissenting from such plan are 248
entitled to relief in the manner and under the conditions 249
provided in section 1701.85 of the Revised Code, except that when 250
the plan includes only a reduction in the authorized capital 251
stock, in the stock credits, and in the fully paid and issued 252
capital stock, the filing of his THE DISSENTING SHAREHOLDER'S 253
demand for payment of the fair cash value of his THE DISSENTING 255
SHAREHOLDER'S stock credits shall constitute an application for 257
withdrawal or repurchase, and the fair cash value of his THE
DISSENTING SHAREHOLDER'S stock credits as finally determined in 259
accordance with such THAT section shall be payable only at such 260
THE times as THAT are permitted under his THE DISSENTING 262
SHAREHOLDER'S right of withdrawal or repurchase at the time such 263
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an application is filed. 264
(D) The plan shall become effective when it has been 266
adopted by the shareholders and approved in writing by the 267
superintendent, and the president or a vice-president, and the 268
secretary or an assistant secretary, of the association have 269
signed and filed in the office of the secretary of state a 270
certificate of reorganization, with the consent of the 271
superintendent indorsed thereon ENDORSED ON THE CERTIFICATE, 272
containing a copy of the plan of reorganization, and also 274
containing the following items, unless the item in question is 275
included in such THE plan:
(1) All statements required by paragraphs DIVISIONS 278
(A)(1), (2), and (4) of division (A) (3) of section 1701.04 of 279
the Revised Code to be included in the original articles of 280
incorporation, and any provisions authorized by paragraphs (1) 281
DIVISIONS (B)(3), (2) (4), and (3) of division (B) (5) of such 283
THAT section which are to remain in effect or to be included as 285
part of the plan;
(2) A statement of the amount of fully paid and issued 287
capital stock, the amount of stock credits, and the amount of 288
authorized capital stock, both before and after such THE 289
reorganization. 290
(E) Any such AN association whose plan of reorganization 292
is disapproved by the superintendent may, within thirty days 293
after such THE disapproval and by leave of court first obtained, 294
MAY file, in the court of common pleas of Franklin county or of 297
the county in which the association has its principal place of 298
business, an action against the superintendent, alleging the 299
facts upon which it relies for a reversal of his THE 300
SUPERINTENDENT'S action and praying for such a reversal. The 302
action of the superintendent shall not be reversed unless the 303
court finds that he THE SUPERINTENDENT exceeded his THE 304
SUPERINTENDENT'S power or abused his THE SUPERINTENDENT'S 305
discretion in disapproving such THE plan. 306
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No order of court shall restrain the superintendent from 308
making an examination of such THE association and its affairs at 309
any time under sections 1155.09 and 1155.10 of the Revised Code. 310
Sec. 1701.04. (A) Any person, singly or jointly with 319
others, and without regard to residence, domicile, or state of 320
incorporation, may form a corporation by signing and filing with 321
the secretary of state articles of incorporation which shall set 322
forth ALL OF THE FOLLOWING: 323
(1) The name of the corporation, which shall be in 325
compliance with the provisions of division (A) of section 1701.05 326
of the Revised Code; 327
(2) The place in this state where the principal office of 329
the corporation is to be located; 330
(3) The purpose or purposes for which the corporation is 332
formed, which may consist of a statement that the purpose, either 333
alone or with other specified purposes, is to engage in any 334
lawful act or activity for which corporations may be formed under 335
this chapter. By such statement, all lawful acts and activities 336
of the corporation conforming to the conditions and limitations, 337
if any, specified in the articles are within the purposes of the 338
corporation. 339
(4) The authorized number and the par value per share of 341
shares with par value, and the authorized number of shares 342
without par value, except that the articles of a banking, safe 343
deposit, trust, or insurance corporation shall not authorize 344
shares without par value; the express terms, if any, of the 345
shares; and, if the shares are classified, the designation of 346
each class, the authorized number and par value per share, if 347
any, of the shares of each class, and the express terms of the 348
shares of each class; 349
(5)(4) If the corporation is to have an initial stated 351
capital, the amount of that stated capital. 352
(B) The articles also may set forth ANY OF THE FOLLOWING: 354
(1) THE NAMES OF THE INDIVIDUALS WHO ARE TO SERVE AS 356
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INITIAL DIRECTORS; 357
(2) THE PURPOSE OR PURPOSES FOR WHICH THE CORPORATION IS 360
FORMED, BUT IN THE ABSENCE OF A STATEMENT OF THE PURPOSE OR
PURPOSES OR EXCEPT AS EXPRESSLY SET FORTH IN SUCH STATEMENT, THE 362
PURPOSE FOR WHICH ANY CORPORATION IS FORMED IS TO ENGAGE IN ANY 363
LAWFUL ACT OR ACTIVITY FOR WHICH A CORPORATION MAY BE FORMED 364
UNDER THIS CHAPTER, AND ALL LAWFUL ACTS AND ACTIVITIES OF THE 365
CORPORATION ARE WITHIN THE PURPOSES OF THE CORPORATION; 366
(3) Any lawful provision for the purpose of defining, 368
limiting, or regulating the exercise of the authority of the 369
corporation, the incorporators, the directors, the officers, the 370
shareholders, or the holders of any class of shares; 371
(2)(4) Any provision that may be set forth in the 373
regulations; 374
(3)(5) A provision specifying the period of existence of 376
the corporation if it is to be otherwise than perpetual; 377
(4)(6) Subject to division (C) of this section, any 379
additional provision permitted by this chapter. 380
(C) Original articles of a corporation may not set forth 382
any provision that eliminates the rights of shareholders under 383
this chapter to cumulate the voting power that they possess in 384
the election of directors. 385
(D) A written appointment of a statutory agent for the 387
purposes set forth in section 1701.07 of the Revised Code shall 388
be filed with the articles, unless the corporation belongs to one 389
of the classes mentioned in division (O) of that section. 390
(E) The legal existence of the corporation shall begin 392
upon the filing of the articles, and, unless the articles 393
otherwise provide, its period of existence shall be perpetual. 394
Sec. 1701.06. (A) The express terms of shares may include 403
statements specifying ANY OF THE FOLLOWING: 404
(1) Dividend or distribution rights, which may be: 406
cumulative or noncumulative; at a specified rate, amount, or 407
proportion; with or without further participation rights; and in 408
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preference to, junior to, or on a parity in whole or in part with 409
dividend or distribution rights of shares of any other class; 410
(2) Liquidation rights, preferences, and price; 412
(3) Redemption rights and price; 414
(4) Sinking fund retirements REQUIREMENTS, which may 416
require the corporation to provide a sinking fund out of earnings 418
or otherwise for the purchase or redemption of such THE shares or 419
for dividends or distributions on them; 421
(5) Voting rights, which may be full, limited, or denied, 423
except as otherwise required by law; 424
(6) Pre-emptive rights, or the denial or limitation of 426
them; 427
(7) Conversion rights; 429
(8) Restrictions on the issuance of shares; 431
(9) Rights of alteration of express terms; 433
(10) The division of any class of shares into series; 435
(11) The designation and authorized number of shares of 437
each series; 438
(12) The right of the directors, subject to such ANY 440
limitations as THAT may be stated, to adopt amendments to the 441
articles in respect of any unissued or treasury shares of any 443
class and thereby to fix or change: the division of such shares 444
into series and the designation and authorized number of shares 445
of each series; the dividend or distribution rate; the dates of 446
payment of dividends or distributions and the dates from which 447
they are cumulative; liquidation price; redemption rights and 448
price; sinking fund requirements; conversion rights; and 449
restrictions on the issuance of shares of any class or series 450
DETERMINING, IN WHOLE OR IN PART, THE EXPRESS TERMS, WITHIN THE 452
LIMITS SET FORTH IN THIS CHAPTER, OF ANY CLASS OF SHARES BEFORE 453
THE ISSUANCE OF ANY SHARES OF THAT CLASS, OR OF ONE OR MORE 454
SERIES WITHIN A CLASS BEFORE THE ISSUANCE OF ANY SHARES OF THAT 455
SERIES;
(13) Any other relative, participating, optional, or other 457
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special rights and privileges of, and qualifications or 458
restrictions on, the rights of holders of shares of any class or 459
series. 460
(B) The express terms of shares of different series of any 462
particular class shall be identical, except that there may be 463
variations in respect of: the dividend or distribution rate; the 464
dates of payment of dividends or distributions and the dates from 465
which they are cumulative; redemption rights and price; 466
liquidation price; sinking fund requirements; conversion rights; 467
and restrictions on the issuance of shares of the same series or 468
of any other class or series EACH SERIES OF A CLASS SHALL BE 469
GIVEN A DISTINGUISHING DESIGNATION. ALL SHARES OF A SERIES SHALL 471
HAVE EXPRESS TERMS IDENTICAL WITH THOSE OF OTHER SHARES OF THE 472
SAME SERIES. ANY OF THE EXPRESS TERMS OF ANY CLASS OR SERIES OF 473
SHARES MAY BE MADE DEPENDENT UPON FACTS ASCERTAINABLE OUTSIDE THE 474
ARTICLES OR ANY AMENDMENT TO THOSE ARTICLES, PROVIDED THAT THE 475
MANNER IN WHICH THE FACTS OPERATE UPON THE EXPRESS TERMS IS SET 476
FORTH IN THE ARTICLES OR ANY AMENDMENT TO THOSE ARTICLES. 477
Sec. 1701.09. (A) After the articles have been filed, the 486
incorporators or a majority of them shall MAY receive 487
subscriptions for shares at such time and place as THAT they may 489
determine.
(B) Unless the articles fix the consideration for which 491
subscriptions are to be received, ALL OF THE FOLLOWING APPLY: 492
(1) If subscriptions are to be received for shares without 494
par value, the incorporators shall fix the consideration for 495
which they will receive subscriptions for such shares. 496
(2) If subscriptions are to be received for shares with 498
par value, the consideration for the shares shall be the par 499
value or such THE greater consideration as THAT the incorporators 501
fix.
(3) If any subscriptions are to be payable otherwise than 503
in money, the incorporators may determine the fair value to the 504
corporation of the consideration for such THE shares. 505
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(C) No subscriptions for shares shall be received by the 507
incorporators IF THE ARTICLES NAME THE INITIAL DIRECTORS OR after 508
THE MEETING OF THE SHAREHOLDERS OR INCORPORATORS AT WHICH the 509
INITIAL election of directors OCCURS. 510
(D) The failure of incorporators of a corporation formed 512
or attempted to be formed under the laws of this state then in 513
effect to file in the office of the secretary of state a 514
certificate of subscripion SUBSCRIPTION required by such THOSE 515
laws to be filed does not make the existence of said THE 516
corporation or any of its acts subject to question. 517
Sec. 1701.10. (A) AFTER INCORPORATION, ALL OF THE 519
FOLLOWING APPLY: 520
(1) IF THE INITIAL DIRECTORS ARE NAMED IN THE ARTICLES, 522
THE INITIAL DIRECTORS SHALL HOLD AN ORGANIZATIONAL MEETING, AT 523
THE CALL OF A MAJORITY OF THE DIRECTORS, TO COMPLETE THE 524
ORGANIZATION OF THE CORPORATION BY RECEIVING SUBSCRIPTIONS, 525
APPOINTING OFFICERS, ADOPTING REGULATIONS, AND CARRYING ON ANY 526
OTHER BUSINESS BROUGHT BEFORE THE MEETING. 527
(2) IF THE INITIAL DIRECTORS ARE NOT NAMED IN THE 529
ARTICLES, THE INCORPORATOR OR INCORPORATORS EITHER SHALL RECEIVE 530
SUBSCRIPTIONS AS PROVIDED IN DIVISION (A) OF SECTION 1701.09 OF 532
THE REVISED CODE OR SHALL HOLD AN ORGANIZATIONAL MEETING AT THE 534
CALL OF A MAJORITY OF THE INCORPORATORS TO ELECT DIRECTORS WHO 535
SHALL COMPLETE THE ORGANIZATION OF THE CORPORATION AS PROVIDED IN 536
DIVISION (A)(1) OF THIS SECTION. IF SUBSCRIPTIONS FOR SHARES ARE 537
RECEIVED BY THE INCORPORATORS, THE INCORPORATORS, OR A MAJORITY 538
OF THEM, SHALL GIVE NOT LESS THAN SEVEN DAYS' WRITTEN NOTICE TO 539
THE SHAREHOLDERS, UNLESS WRITTEN NOTICE IS WAIVED BY THE 540
SHAREHOLDERS, TO MEET AT A SPECIFIED TIME AND PLACE FOR THE 541
PURPOSES OF ADOPTING REGULATIONS, ELECTING DIRECTORS, AND 542
TRANSACTING ANY OTHER BUSINESS. THE SHAREHOLDERS SHALL MEET FOR 543
THOSE PURPOSES AT THE TIME AND PLACE SPECIFIED. 544
(3) NOTWITHSTANDING DIVISIONS (A)(1) AND (2) OF THIS 546
SECTION, IF REGULATIONS HAVE NOT BEEN ADOPTED WITHIN NINETY DAYS 547
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AFTER THE FORMATION OF THE CORPORATION, REGULATIONS MAY BE 548
ADOPTED ONLY BY THE SHAREHOLDERS IN EITHER OF THE FOLLOWING WAYS: 549
(a) AT A MEETING OF SHAREHOLDERS CALLED FOR THAT PURPOSE 552
BY THE DIRECTORS OR, IF NO DIRECTORS HAVE BEEN NAMED IN THE 553
ARTICLES OR ELECTED, AT A MEETING OF SHAREHOLDERS CALLED FOR THAT 554
PURPOSE BY AT LEAST A MAJORITY OF THE INCORPORATORS. THE 555
DIRECTORS OR INCORPORATORS SHALL GIVE NOT LESS THAN SEVEN DAYS' 556
WRITTEN NOTICE TO THE SHAREHOLDERS, UNLESS WRITTEN NOTICE IS 557
WAIVED BY THE SHAREHOLDERS, TO MEET AT A SPECIFIED TIME AND PLACE 558
FOR THE PURPOSES OF ADOPTING REGULATIONS AND TRANSACTING ANY 559
OTHER BUSINESS;
(b) WITHOUT A MEETING, BY THE WRITTEN CONSENT OF THE 562
HOLDERS OF SHARES ENTITLING THEM TO EXERCISE TWO-THIRDS OF THE 563
VOTING POWER ON THE PROPOSAL.
(4) IN NO EVENT MAY THE DIRECTORS TAKE ANY ACTION TO ADOPT 567
OR AMEND REGULATIONS AFTER THE SHAREHOLDERS HAVE ADOPTED
REGULATIONS. 568
(B) ACTION REQUIRED OR PERMITTED BY THIS CHAPTER TO BE 571
TAKEN BY THE INCORPORATORS AT AN ORGANIZATIONAL MEETING MAY BE 572
TAKEN WITHOUT A MEETING IF THE ACTION TAKEN IS EVIDENCED BY ONE 573
OR MORE WRITTEN CONSENTS DESCRIBING THE ACTION TAKEN AND SIGNED 574
BY EACH INCORPORATOR. 575
(C) AN ORGANIZATIONAL MEETING MAY BE HELD IN OR OUT OF 578
THIS STATE.
Sec. 1701.11. (A)(1) Regulations for the government of a 587
corporation, the conduct of its affairs, and the management of 588
its property, consistent with law and the articles, may be 589
adopted by IN ANY OF THE FOLLOWING WAYS: 590
(a) WITHIN NINETY DAYS AFTER THE CORPORATION IS FORMED, BY 592
THE DIRECTORS IN ACCORDANCE WITH SECTION 1701.10 OF THE REVISED 593
CODE;
(b) BY the shareholders at a meeting held for that 595
purpose, by the affirmative vote of the holders of shares 596
entitling them to exercise a majority of the voting power of the 597
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corporation on the proposal, or may be adopted without; 598
(c) WITHOUT a meeting, by the written consent of the 601
holders of shares entitling them to exercise two-thirds of the
voting power OF THE CORPORATION on the proposal; and the. 602
(2) THE regulations may be amended, or new regulations may 604
be adopted, in like manner and by like vote or consent, or, if 605
EITHER OF THE FOLLOWING WAYS: 606
(a) BY THE SHAREHOLDERS AT A MEETING HELD FOR THAT 609
PURPOSE, BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES 610
ENTITLING THEM TO EXERCISE A MAJORITY OF THE VOTING POWER OF THE 611
CORPORATION ON THE PROPOSAL;
(b) WITHOUT A MEETING, BY THE WRITTEN CONSENT OF THE 614
HOLDERS OF SHARES ENTITLING THEM TO EXERCISE TWO-THIRDS OF THE 615
VOTING POWER OF THE CORPORATION ON THE PROPOSAL. 616
(3) IF the articles or the regulations THAT HAVE BEEN 619
ADOPTED so provide or permit, REGULATIONS MAY BE ADOPTED OR 620
AMENDED OR NEW REGULATIONS MAY BE ADOPTED by the affirmative vote 621
or written consent of the holders of shares entitling them to 622
exercise a greater or lesser proportion but not less than a
majority of the voting power OF THE CORPORATION. 623
(B) Without limiting the generality of the authority 625
described in division (A) of this section, the regulations may 626
include provisions with respect to ALL OF THE FOLLOWING: 627
(1) The time and place for holding, the manner of and 629
authority for calling, giving notice of, and conducting, and the 630
requirements of a quorum for, meetings of shareholders; 631
(2) The taking of a record of shareholders or the 633
temporary closing of books against transfers of shares; 634
(3) The number, classification, manner of fixing or 636
changing the number, qualifications, term of office, and 637
compensation or manner of fixing compensation, of directors; 638
(4) The time and place for holding, the manner of and 640
authority for calling, giving notice of, and conducting, and the 641
requirements of a quorum for, meetings of the directors; 642
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(5) The appointment of an executive and other committees 644
of the directors, and their authority; 645
(6) The titles, qualifications, duties, term of office, 647
compensation or manner of fixing compensation, and the removal, 648
of officers; 649
(7) The terms on which new certificates for shares may be 651
issued in the place of lost, stolen, or destroyed certificates; 652
(8) The manner in which and conditions upon which a 654
certificated security, and the conditions upon which an 655
uncertificated security, and the shares represented by a 656
certificated or uncertificated security, may be transferred, 657
restrictions on the right to transfer the shares, and 658
reservations of liens on the shares.; 659
(9)(a) Restrictions on the transfer and the right to 661
transfer shares of either of the following: 662
(i) An issuing public corporation to any person in a 664
control share acquisition; 665
(ii) A corporation with fifty or more shareholders to any 667
person in an acquisition that would be a control share 668
acquisition if the corporation were an issuing public 669
corporation. 670
(b) The restrictions on the transfer and the right to 672
transfer shares described in division (B)(9)(a)(i) and (ii) of 673
this section may include requirements and procedures for consent 674
to such an acquisition OF THE SHARES by directors based on a 675
determination by the directors of the best interests of the 677
corporation and its shareholders, consent to such an acquisition 678
OF THE SHARES by shareholders, and reasonable sanctions for a 680
violation of such THOSE requirements, including the right of the 681
corporation to refuse to transfer, to redeem, or to deny voting 682
or other shareholder rights appurtenant to shares acquired in 683
such an acquisition OF THE SHARES.
(10) Defining, limiting, or regulating the exercise of the 685
authority of the corporation, the directors, the officers, or all 686
16
the shareholders. 687
(C) The shareholders of a corporation may adopt and may 689
authorize the directors to adopt, either before or during an 690
emergency, as that term is defined in division (U) of section 691
1701.01 of the Revised Code, emergency regulations which THAT 692
shall be operative only during an emergency. The emergency 694
regulations may include such ANY provisions as THAT are 695
authorized to be included in regulations by divisions (A) and (B) 697
of this section. In addition, unless expressly prohibited by the 698
articles or the regulations, the emergency regulations may make 699
any provision, notwithstanding any different provisions in 700
sections 1701.01 to 1701.98 of the Revised Code THIS CHAPTER and 701
notwithstanding any different provisions in the articles or the 703
regulations that are not expressly stated to be operative during 704
an emergency, that may be practical or necessary with respect to 705
the following:
(1) The time and place for holding, the manner of and 707
authority for calling, giving notice of, and conducting, and the 708
requirements of a quorum for, meetings of the directors; 709
(2) The creation and appointment of an executive and other 711
committees of the directors and the delegation of authority to 712
the committees by the board; 713
(3) The creation, existence, and filling of vacancies, 715
including temporary vacancies, in the office of director; 716
(4) The selection, by appointment, election, or otherwise, 718
of officers and other persons to serve as directors for a meeting 719
of the board in the absence from the meeting of one or more of 720
the directors; 721
(5) The creation, existence, and filling of vacancies, 723
including temporary vacancies, in any office; 724
(6) The order of rank and the succession to the duties and 726
authority of officers. 727
(D) If the regulations are amended or new regulations are 729
adopted, without a meeting of the shareholders, the secretary of 730
17
the corporation shall mail a copy of the amendment or the new 731
regulations to each shareholder who would have been entitled to 732
vote on the adoption of the amendment or the new regulations and 733
did not participate in the adoption of the amendment or the new 734
regulations. 735
(E) No person dealing with the corporation shall be 737
charged with constructive notice of the regulations. 738
(F) Unless expressly prohibited by the articles or the 740
regulations or unless otherwise provided by the emergency 741
regulations, the following special rules shall be applicable 742
during an emergency notwithstanding any different provision 743
elsewhere in sections 1701.01 to 1701.98 of the Revised Code THIS 744
CHAPTER: 745
(1) Meetings of the directors may be called by any officer 747
or director. 748
(2) Notice of the time and place of each meeting of the 750
directors shall be given to such of the directors as it may be 751
feasible to reach at the time and by such THE means of 752
communication, written or oral, personal or mass, as may be 754
practicable at the time. 755
(3) The director or directors present at any meeting of 757
the directors that has been duly called and notice of which has 758
been duly given shall constitute a quorum for the meeting, and, 759
in the absence of one or more of the directors, the director or 760
directors present may appoint one or more of the officers of the 761
corporation directors for the meeting. 762
(4) If none of the directors attends a meeting of the 764
directors that has been duly called and notice of which has been 765
duly given, the officers of the corporation who are present, not 766
exceeding three, in order of rank, shall be directors for the 767
meeting, shall constitute a quorum for the meeting, and may 768
appoint one or more of the other officers of the corporation 769
directors for the meeting. 770
(5) If the chief executive officer dies, is missing, or 772
18
for any other reason is temporarily or permanently incapable of 773
discharging the duties of his THE office, the next ranking 774
officer who is available shall assume the duties and authority of 776
the office of the deceased, missing, or incapacitated chief 777
executive officer until such time as the directors shall 778
otherwise order.
(6) The offices of secretary and treasurer shall be deemed 780
to be of equal rank, and, within the same office and as between 781
the offices of secretary and treasurer, rank shall be determined 782
by priority in time of the first election to the office or, if 783
two or more persons shall have been first elected to the office 784
at the same time, by seniority in age. 785
Sec. 1701.13. (A) A corporation may sue and be sued. 794
(B) A corporation may adopt and alter a corporate seal and 796
use the same or a facsimile of the corporate seal, but failure to 798
affix the corporate seal shall not affect the validity of any 799
instrument.
(C) At the request or direction of the United States 801
government or any agency of the United States government, a 802
corporation may transact any lawful business in aid of national 803
defense or in the prosecution of any war in which the nation is 804
engaged. 805
(D) Unless otherwise provided in the articles, a 807
corporation may take property of any description, or any interest 808
in property, by gift, devise, or bequest, and may make donations 809
for the public welfare or for charitable, scientific, or 810
educational purposes. 811
(E)(1) A corporation may indemnify or agree to indemnify 813
any person who was or is a party, or is threatened to be made a 814
party, to any threatened, pending, or completed action, suit, or 815
proceeding, whether civil, criminal, administrative, or 816
investigative, other than an action by or in the right of the 817
corporation, by reason of the fact that he THE PERSON is or was a 819
director, officer, employee, or agent of the corporation, or is 820
19
or was serving at the request of the corporation as a director, 821
trustee, officer, employee, member, manager, or agent of another 822
corporation, domestic or foreign, nonprofit or for profit, a 824
limited liability company, or a partnership, joint venture, 825
trust, or other enterprise, against expenses, including 826
attorney's fees, judgments, fines, and amounts paid in settlement 827
actually and reasonably incurred by him THE PERSON in connection 828
with such action, suit, or proceeding, if he THE PERSON acted in 830
good faith and in a manner he THE PERSON reasonably believed to 832
be in or not opposed to the best interests of the corporation, 834
and, with respect to any criminal action or proceeding, if he THE 835
PERSON had no reasonable cause to believe his THE PERSON'S 836
conduct was unlawful. The termination of any action, suit, or 837
proceeding by judgment, order, settlement, or conviction, or upon 838
a plea of nolo contendere or its equivalent, shall not, of 839
itself, create a presumption that the person did not act in good 840
faith and in a manner he THE PERSON reasonably believed to be in 841
or not opposed to the best interests of the corporation, and, 843
with respect to any criminal action or proceeding, he THE PERSON 844
had reasonable cause to believe that his THE PERSON'S conduct was 846
unlawful.
(2) A corporation may indemnify or agree to indemnify any 848
person who was or is a party, or is threatened to be made a 849
party, to any threatened, pending, or completed action or suit by 850
or in the right of the corporation to procure a judgment in its 851
favor, by reason of the fact that he THE PERSON is or was a 852
director, officer, employee, or agent of the corporation, or is 854
or was serving at the request of the corporation as a director, 855
trustee, officer, employee, member, manager, or agent of another 856
corporation, domestic or foreign, nonprofit or for profit, a 858
limited liability company, or a partnership, joint venture, 859
trust, or other enterprise, against expenses, including 860
attorney's fees, actually and reasonably incurred by him THE 861
PERSON in connection with the defense or settlement of such 863
20
action or suit, if he THE PERSON acted in good faith and in a 865
manner he THE PERSON reasonably believed to be in or not opposed 867
to the best interests of the corporation. HOWEVER, except that 868
no indemnification shall be made in respect of any EITHER of the 869
following UNLESS, AND ONLY TO THE EXTENT THAT, THE COURT OF 870
COMMON PLEAS OR THE COURT IN WHICH THE ACTION OR SUIT WAS BROUGHT 871
DETERMINES, UPON APPLICATION, THAT, DESPITE THE ADJUDICATION OF 872
LIABILITY, BUT IN VIEW OF ALL THE CIRCUMSTANCES OF THE CASE, THE 873
PERSON IS FAIRLY AND REASONABLY ENTITLED TO INDEMNITY FOR THE 874
EXPENSES THAT THE COURT OF COMMON PLEAS OR OTHER COURT DETERMINES 876
TO BE PROPER:
(a) Any claim, issue, or matter as to which such THE 878
person is adjudged to be liable IN DAMAGES for negligence or 879
misconduct in the performance of his THE PERSON'S duty to the 880
corporation unless, and only to the extent that, the court of 882
common pleas or the court in which such action or suit was 883
brought determines, upon application, that, despite the 884
adjudication of liability, but in view of all the circumstances 885
of the case, such person is fairly and reasonably entitled to 886
indemnity for such expenses as the court of common pleas or such 887
other court shall deem proper;
(b) Any action or suit in which the only liability 889
asserted against a director is pursuant to ADJUDGED TO BE LIABLE 890
IN DAMAGES UNDER DIVISION (D) OF section 1701.95 1701.59 of the 892
Revised Code.
(3) To the extent that a director, trustee, officer, 894
employee, member, manager, or agent has been successful on the 895
merits or otherwise in defense of any action, suit, or proceeding 896
referred to in division (E)(1) or (2) of this section, or in 897
defense of any claim, issue, or matter therein, he THE PERSON 898
shall be indemnified against expenses, including attorney's fees, 900
actually and reasonably incurred by him THE PERSON in connection 901
with the action, suit, or proceeding. 902
(4) Any indemnification under division (E)(1) or (2) of 904
21
this section, unless ordered by a court, shall be made by the 905
corporation only as authorized in the specific case, upon a 906
determination that indemnification of the director, trustee, 907
officer, employee, member, manager, or agent is proper in the 908
circumstances because he THE PERSON has met the applicable 909
standard of conduct set forth in division (E)(1) or (2) of this 911
section. Such determination shall be made as follows: 912
(a) By a majority vote of a quorum consisting of directors 914
of the indemnifying corporation who were not and are not parties 915
to or threatened with the action, suit, or proceeding referred to 916
in division (E)(1) or (2) of this section; 917
(b) If the quorum described in division (E)(4)(a) of this 919
section is not obtainable or if a majority vote of a quorum of 920
disinterested directors so directs, in a written opinion by 921
independent legal counsel other than an attorney, or a firm 922
having associated with it an attorney, who has been retained by 923
or who has performed services for the corporation or any person 924
to be indemnified within the past five years; 925
(c) By the shareholders; 927
(d) By the court of common pleas or the court in which the 930
action, suit, or proceeding referred to in division (E)(1) or (2)
of this section was brought. 931
Any determination made by the disinterested directors under 933
division (E)(4)(a) or by independent legal counsel under division 934
(E)(4)(b) of this section shall be promptly communicated to the 935
person who threatened or brought the action or suit by or in the 936
right of the corporation under division (E)(2) of this section, 937
and, within ten days after receipt of such notification, such THE 939
person shall have the right to petition the court of common pleas
or the court in which such THE action or suit was brought to 940
review the reasonableness of such THE determination. 941
(5)(a) Unless at the time of a director's act or omission 943
that is the subject of an action, suit, or proceeding referred to 944
in division (E)(1) or (2) of this section, the articles or the 945
22
regulations of a corporation state, by specific reference to this 946
division, that the provisions of this division do not apply to 947
the corporation and unless the only liability asserted against a 948
director in an action, suit, or proceeding referred to in 949
division (E)(1) or (2) of this section is pursuant to section 950
1701.95 of the Revised Code, expenses, including attorney's fees, 951
incurred by a director in defending the action, suit, or 952
proceeding shall be paid by the corporation as they are incurred, 953
in advance of the final disposition of the action, suit, or 954
proceeding, upon receipt of an undertaking by or on behalf of the 955
director in which he THE DIRECTOR agrees to do both of the 956
following: 957
(i) Repay such THE amount if it is proved by clear and 959
convincing evidence in a court of competent jurisdiction that his 960
THE DIRECTOR'S action or failure to act involved an act or 961
omission undertaken with deliberate intent to cause injury to the 963
corporation or undertaken with reckless disregard for the best 964
interests of the corporation; 965
(ii) Reasonably cooperate with the corporation concerning 967
the action, suit, or proceeding. 968
(b) Expenses, including attorney's fees, incurred by a 970
director, trustee, officer, employee, member, manager, or agent 971
in defending any action, suit, or proceeding referred to in 973
division (E)(1) or (2) of this section, may be paid by the 974
corporation as they are incurred, in advance of the final 975
disposition of the action, suit, or proceeding, as authorized by 976
the directors in the specific case, upon receipt of an 977
undertaking by or on behalf of the director, trustee, officer, 978
employee, member, manager, or agent to repay such amount, if it 980
ultimately is determined that he THE PERSON is not entitled to be 982
indemnified by the corporation.
(6) The indemnification authorized by this section shall 984
not be exclusive of, and shall be in addition to, any other 985
rights granted to those seeking indemnification under the 986
23
articles, the regulations, any agreement, a vote of shareholders 988
or disinterested directors, or otherwise, both as to action in 989
their official capacities and as to action in another capacity 990
while holding their offices or positions, and shall continue as
to a person who has ceased to be a director, trustee, officer, 991
employee, member, manager, or agent and shall inure to the 992
benefit of the heirs, executors, and administrators of such a 994
person.
(7) A corporation may purchase and maintain insurance or 996
furnish similar protection, including, but not limited to, trust 997
funds, letters of credit, or self-insurance, on behalf of or for 998
any person who is or was a director, officer, employee, or agent 999
of the corporation, or is or was serving at the request of the 1,000
corporation as a director, trustee, officer, employee, member, 1,001
manager, or agent of another corporation, domestic or foreign, 1,003
nonprofit or for profit, a limited liability company, or a 1,004
partnership, joint venture, trust, or other enterprise, against 1,006
any liability asserted against him THE PERSON and incurred by him 1,007
THE PERSON in any such capacity OF THOSE CAPACITIES, or arising 1,008
out of his THE PERSON'S status as such, whether or not the 1,011
corporation would have the power to indemnify him THE PERSON 1,012
against such liability under this section. Insurance may be
purchased from or maintained with a person in which the 1,013
corporation has a financial interest. 1,014
(8) The authority of a corporation to indemnify persons 1,016
pursuant to division (E)(1) or (2) of this section does not limit 1,018
the payment of expenses as they are incurred, indemnification, 1,019
insurance, or other protection that may be provided pursuant to 1,020
divisions (E)(5), (6), and (7) of this section. Divisions (E)(1) 1,021
and (2) of this section do not create any obligation to repay or 1,022
return payments made by the corporation pursuant to division 1,023
(E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" 1,025
includes all constituent entities in a consolidation or merger 1,027
24
and the new or surviving corporation, so that any person who is 1,028
or was a director, officer, employee, trustee, member, manager,
or agent of such a constituent entity, or is or was serving at 1,030
the request of such constituent entity as a director, trustee, 1,031
officer, employee, member, manager, or agent of another 1,032
corporation, domestic or foreign, nonprofit or for profit, a 1,034
limited liability company, or a partnership, joint venture, 1,035
trust, or other enterprise, shall stand in the same position 1,036
under this section with respect to the new or surviving 1,037
corporation as he THE PERSON would if he THE PERSON had served 1,039
the new or surviving corporation in the same capacity. 1,040
(F) In carrying out the purposes stated in its articles 1,042
and subject to limitations prescribed by law or in its articles, 1,043
a corporation may DO ANY OF THE FOLLOWING: 1,044
(1) Purchase or otherwise acquire, lease as lessee, invest 1,046
in, hold, use, lease as lessor, encumber, sell, exchange, 1,047
transfer, and dispose of property of any description or any 1,048
interest in such property OF ANY DESCRIPTION; 1,049
(2) Make contracts; 1,051
(3) Form or acquire the control of other corporations, 1,053
domestic or foreign, whether nonprofit or for profit; 1,054
(4) Be a partner, member, associate, or participant in 1,056
other enterprises or ventures, whether FOR profit or nonprofit; 1,057
(5) Conduct its affairs in this state and elsewhere; 1,059
(6) Borrow money, and issue, sell, and pledge its notes, 1,061
bonds, and other evidences of indebtedness, and secure any of its 1,062
obligations by mortgage, pledge, or deed of trust of all or any 1,063
of its property, and guarantee or secure obligations of any 1,064
person; 1,065
(7) Resist a change or potential change in control of the 1,067
corporation if the directors by a majority vote of a quorum 1,068
determine that the change or potential change is opposed to or 1,069
not in the best interests of the corporation IN EITHER OF THE 1,070
FOLLOWING MANNERS: 1,071
25
(a) Upon consideration of the interests of the 1,073
corporation's shareholders and any of the matters set forth in 1,074
division (E) of section 1701.59 of the Revised Code; or 1,075
(b) Because the amount or nature of the indebtedness and 1,077
other obligations to which the corporation or any successor or 1,078
the property of either may become subject in connection with the 1,079
change or potential change in control provides reasonable grounds 1,080
to believe that, within a reasonable period of time, any of the 1,081
following would apply: 1,082
(i) The assets of the corporation or any successor would 1,084
be or become less than its liabilities plus its stated capital, 1,085
if any; 1,086
(ii) The corporation or any successor would be or become 1,088
insolvent; 1,089
(iii) Any voluntary or involuntary proceeding under the 1,091
federal bankruptcy laws concerning the corporation or any 1,092
successor would be commenced by any person. 1,093
(8) Do all things permitted by law and exercise all 1,095
authority within the purposes stated in its articles or 1,096
incidental to its articles. 1,097
(G) Irrespective of the purposes stated in its articles, 1,099
but subject to limitations stated in its articles, a corporation, 1,100
in addition to the authority conferred by division (F) of this 1,101
section, may invest its funds not currently needed in its 1,102
business in any shares or other securities, to such extent that 1,103
as a result of the investment the corporation shall not acquire 1,104
control of another corporation, business, or undertaking the 1,105
activities and operations of which are not incidental to the 1,106
purposes stated in its articles. 1,107
(H)(1) No lack of, or limitation upon, the authority of a 1,109
corporation shall be asserted in any action except (1) by AS 1,110
FOLLOWS: 1,111
(a) BY the state in an action by it against the 1,114
corporation, (2) by;
26
(b) BY or on behalf of the corporation against a director, 1,117
an officer, or any shareholder as such, (3) by A DIRECTOR, 1,118
OFFICER, OR SHAREHOLDER;
(c) BY a shareholder as such or by or on behalf of the 1,121
holders of shares of any class against the corporation, OR a 1,122
director, an officer, or any shareholder as such, or (4) in A 1,123
DIRECTOR, OFFICER, OR SHAREHOLDER;
(d) IN an action involving an alleged overissue of shares. 1,125
This division 1,126
(2) DIVISION (H)(1) OF THIS SECTION shall apply to any 1,129
action brought in this state upon any contract made in this state 1,130
by a foreign corporation.
Sec. 1701.15. (A) Unless otherwise provided in THE 1,139
SHAREHOLDERS OF A CORPORATION DO NOT HAVE A PRE-EMPTIVE RIGHT TO 1,140
ACQUIRE THE CORPORATION'S UNISSUED SHARES EXCEPT TO THE EXTENT 1,141
THE ARTICLES SO PROVIDE. IF the articles, PROVIDE THAT the 1,142
holders of the shares of any class, other than shares which THAT 1,144
are limited as to dividend or distribution rate and liquidation 1,146
price, shall HAVE PRE-EMPTIVE RIGHTS, THOSE HOLDERS, upon the 1,148
offering or sale for cash of shares of the same class, SHALL have 1,150
the right, during a reasonable time and on reasonable terms fixed 1,151
by the directors, to purchase such THE shares in proportion to 1,152
their respective holdings of shares of such class, at a price 1,154
fixed as provided in sections 1701.01 to 1701.98 of the Revised 1,155
Code THIS CHAPTER, unless the shares offered or sold are IN ANY 1,156
OF THE FOLLOWING CATEGORIES:
(1) Treasury shares; 1,158
(2) Issued as a share dividend or distribution; 1,160
(3) Issued or agreed to be issued for considerations other 1,162
than money; 1,163
(4) Issued or agreed to be issued upon exercise of options 1,165
granted and authorized in accordance with section 1701.16 of the 1,166
Revised Code; 1,167
(5) Issued or agreed to be issued upon conversion of 1,169
27
convertible shares authorized in the articles, or upon exercise 1,170
of conversion rights conferred and authorized in accordance with 1,171
section 1701.22 of the Revised Code; 1,172
(6) Offered to shareholders in satisfaction of their 1,174
pre-emptive rights and not purchased by such shareholders, and 1,176
thereupon issued or agreed to be issued for a consideration not 1,177
less than that at which such THE shares were so offered to such 1,178
shareholders, less reasonable expenses, compensation, or discount 1,179
paid or allowed for the sale, underwriting, or purchase of such 1,180
THE shares, unless by the affirmative vote or written order of 1,182
the holders of two-thirds of the shares otherwise entitled to 1,183
such THE pre-emptive rights, the pre-emptive rights are restored 1,184
as to any of such THE shares not theretofore PREVIOUSLY issued or 1,186
agreed to be issued;
(7) Released from pre-emptive rights by the affirmative 1,188
vote or written consent of the holders of two-thirds of the 1,189
shares entitled to such THE pre-emptive rights. Any such vote or 1,191
consent shall be entered in the records of the corporation and
shall be binding on all shareholders and their transferees for 1,192
the time specified in such THE vote or consent up to but not 1,193
exceeding one year, and shall protect all persons who within such 1,194
THAT time acquire the shares or options on or conversion or other 1,195
rights with respect to the shares so released; 1,196
(8) Released from pre-emptive rights by the affirmative 1,198
vote or written consent of the holders of a majority of the 1,199
shares entitled to such THE pre-emptive rights, for offering and 1,200
sale, or the grant of options with respect thereto, to any or all 1,201
employees of the corporation or of subsidiary corporations or to 1,202
a trustee on their behalf, under a plan adopted or to be adopted 1,203
by the directors for that purpose. 1,204
(B) No action shall be brought upon any cause of action 1,206
arising under division (A) of this section at any time after two 1,207
years from the day on which a written notice or other 1,208
communication is given or mailed to each shareholder having such 1,209
28
a THE cause of action informing the shareholder of the 1,210
transaction giving rise thereto TO THE CAUSE OF ACTION, and no 1,211
action shall in any event be brought upon any such cause of 1,213
action OF THAT NATURE at any time after four years from the day 1,215
on which such THE cause of action arose, or from the effective 1,216
date of this provision, whichever is the later.
(C) THE PROVISIONS OF DIVISION (A) OF THIS SECTION AS THEY 1,219
EXISTED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT, SHALL 1,220
CONTINUE TO APPLY TO ANY CORPORATION INCORPORATED PRIOR TO THE 1,222
EFFECTIVE DATE OF THIS AMENDMENT, UNTIL THE SHAREHOLDERS OF THE
CORPORATION ADOPT AN AMENDMENT TO ITS ARTICLES EXPRESSLY 1,223
PROVIDING THAT THE PROVISIONS OF DIVISION (A) OF THIS SECTION 1,225
THAT TAKE EFFECT ON THE EFFECTIVE DATE OF THIS AMENDMENT APPLY TO 1,227
THE CORPORATION OR AMENDED ARTICLES OF INCORPORATION.
Sec. 1701.18. (A) Except as provided in the case of 1,236
change of shares, share dividends or distributions, 1,237
reorganization, merger, consolidation, combination, or conversion 1,238
of shares or obligations into shares, THE FOLLOWING APPLY: 1,239
(1) Payment for shares shall be made with money or other 1,241
property of any description, or any interest therein IN PROPERTY, 1,243
actually transferred to the corporation, or labor or services 1,244
actually rendered to the corporation. 1,245
(2) In the case of shares with par value, other than 1,247
treasury shares, said THE consideration shall be not less than 1,248
the par value of the shares, provided that such THE shares may be 1,250
sold and paid for at such a discount from the par value of the 1,252
shares as THAT would amount to or not exceed reasonable 1,253
compensation for the sale, underwriting, or purchase of such THE 1,255
shares, and, regardless of such THE discount such, THE shares 1,257
shall be deemed to be fully paid. 1,258
(3) In the case of treasury shares with par value, the 1,260
consideration may be less than the par value of the shares. 1,261
(B) Promissory notes, drafts, or other obligations of a 1,263
subscriber or purchaser do not constitute payment for shares. 1,264
29
(C) An agreement by a person to perform services as the 1,266
consideration for shares does not, of itself, constitute such THE 1,268
person a shareholder or AND DOES NOT, OF ITSELF, CONSTITUTE 1,269
payment for such shares prior to the performance of such THE 1,270
services.
(D) Except in the case of convertible shares or 1,272
obligations, shares with par value shall not be issued or 1,273
disposed of upon change of shares, share dividends or 1,274
distributions, reorganization, merger, consolidation, exchange of 1,275
shares for other shares or securities, or otherwise, if as a 1,276
result thereof the aggregate liabilities of the corporation plus 1,278
its stated capital would exceed its aggregate assets or any such 1,279
existing excess would be increased. 1,280
(E) When shares have been issued as provided in sections 1,282
1701.01 to 1701.98 of the Revised Code THIS CHAPTER, in the case 1,283
of change of shares, share dividends or distributions, 1,285
reorganization, merger, consolidation, or conversion of shares or 1,286
obligations into shares, or when shares have been paid for in 1,287
conformity with this section, such shares shall be deemed fully 1,288
paid and nonassessable. 1,289
(F) Every person who subscribes for or purchases shares of 1,291
a corporation is liable to the corporation to pay or deliver to 1,292
the corporation the consideration agreed upon, and, except as 1,293
provided in division (A) of this section, if such THE shares are 1,294
with par value, such THE person is obligated to pay to the 1,295
corporation therefor FOR THE SHARES in money or other property or 1,297
services the full par value of the shares. THE PERSON IS NOT 1,299
LIABLE TO THE CORPORATION OR ITS CREDITORS IN ANY OTHER AMOUNT. 1,300
(G) Every holder, whether the original or a transferee, of 1,302
shares not paid for as provided in this section, who has acquired 1,303
them with actual knowledge of that fact, is personally liable to 1,304
the corporation for the amount unpaid on the shares, and his THE 1,305
HOLDER'S liability shall continue notwithstanding any transfer of 1,307
such THE shares, until such THE shares are paid in full; but no 1,309
30
holder who has acquired such THE shares without actual knowledge 1,311
of the fact that the shares are not paid for is under any 1,313
liability in respect of the shares. 1,314
(H) No pledgee or other holder of shares as collateral 1,316
security is personally liable as a shareholder. 1,317
(I) No person who in fact, whether disclosed on the 1,319
records of the corporation or otherwise, holds shares as 1,320
executor, administrator, guardian, trustee, trustee of a voting 1,321
trust, receiver, or in any other fiduciary capacity is personally 1,322
liable as a shareholder, but the estate or property in the hands 1,323
of such fiduciary is liable or the real or beneficial owner is 1,324
liable under this section as equity may require. This section 1,325
does not relieve a fiduciary from liability for a breach of 1,326
trust. 1,327
(J) NEITHER A SHAREHOLDER OF A CORPORATION NOR A 1,329
SUBSCRIBER TO ITS SHARES IS PERSONALLY LIABLE FOR ANY DEBTS, 1,330
OBLIGATIONS, OR LIABILITIES OF THE CORPORATION IN THE ABSENCE OF 1,331
A WRITTEN, ENFORCEABLE AGREEMENT THAT IS SIGNED BY THE 1,332
SHAREHOLDER OR SUBSCRIBER AND THAT SPECIFICALLY UNDERTAKES 1,333
LIABILITY FOR SUCH DEBTS, OBLIGATIONS, OR LIABILITIES. 1,334
Sec. 1701.24. (A) The shares of a corporation are 1,343
personal property. 1,344
(B) Each holder of shares is entitled to one or more 1,346
certificates, signed by the chairperson of the board or the 1,348
president or a vice-president and by the secretary, an assistant
secretary, the treasurer, or an assistant treasurer of the 1,349
corporation, which shall certify the number and class of shares 1,350
held by the holder in such THE corporation, but no certificate 1,351
for shares shall be executed or delivered until such shares are 1,352
fully paid. When such a THE certificate is countersigned by an 1,353
incorporated transfer agent or registrar, the signature of any of 1,354
such THOSE officers of the corporation may be facsimile, 1,355
engraved, stamped, or printed. Although any officer of the 1,356
corporation whose manual or facsimile signature is affixed to 1,357
31
such a THE certificate ceases to be such officer before the 1,359
certificate is delivered, such THE certificate nevertheless shall 1,360
be effective in all respects when delivered. 1,361
(C) A corporation is not obligated to but may issue 1,363
fractional shares. THE HOLDER OF A FRACTIONAL SHARE IS ENTITLED 1,364
TO EXERCISE THE RIGHTS OF A SHAREHOLDER, INCLUDING THE RIGHT TO 1,366
VOTE, TO RECEIVE DIVIDENDS, AND TO PARTICIPATE IN THE ASSETS OF 1,367
THE CORPORATION UPON LIQUIDATION. In the case of uncertificated 1,368
securities, the corporation may proceed as provided in divisions 1,370
(C)(1) and (2) of this section. In the case of certificated 1,371
securities, the corporation may execute and deliver a certificate 1,372
for or including a fraction of a share; or, in lieu thereof, may 1,373
DO ANY OF THE FOLLOWING: 1,374
(1) Pay to the person otherwise entitled to become a 1,376
holder of a fraction of a share an amount in cash specified as 1,377
the value thereof OF THE FRACTION OF A SHARE in the articles, a 1,378
resolution of the directors, or other agreement or instrument 1,380
pursuant to which such fraction of a share OTHERWISE would 1,381
otherwise be issued, or, if not so specified, then the amount 1,383
determined for such THAT purpose by the directors of the issuing 1,384
corporation, or the amount realized upon sale of such THE 1,385
fraction of a share; 1,386
(2) Provide reasonable means to afford to such THE person 1,388
the opportunity, on specified terms and conditions, to purchase 1,389
or sell fractional interests in shares, to the exclusion of all 1,390
rights he THE PERSON OTHERWISE might otherwise have; 1,391
(3) Execute and deliver registered or bearer scrip over 1,393
the manual or facsimile signature of an officer of the 1,394
corporation or of its agent for that purpose, exchangeable as 1,395
therein provided IN THE SCRIP for full shares, but such scrip 1,396
shall not entitle the holder to any rights as a shareholder 1,398
except as therein provided IN THE SCRIP. The scrip may provide 1,399
that it shall become void unless the rights of the holders are 1,401
exercised within a specified period and may contain any other 1,402
32
provisions that the corporation deems advisable. Whenever any 1,403
such scrip ceases to be exchangeable for full shares, the shares 1,404
that OTHERWISE would otherwise have been issuable as therein 1,406
provided IN THE SCRIP shall be deemed to be treasury shares 1,408
unless the scrip contains other provision for their disposition. 1,409
(D) A joint estate with the incidents of a joint estate as 1,411
at common law, including the right of survivorship, may be 1,412
created in shares by registering the same in the case of 1,413
uncertificated securities, or by executing and delivering a 1,414
certificate therefor in the case of certificated securities to 1,415
two or more persons with the words "as joint tenants" or "as 1,416
joint tenants with right of survivorship and not as tenants in 1,417
common" following their names. Upon receipt by the corporation 1,418
of proof satisfactory to it of the death of one or more of such 1,419
joint tenants, it may register the transfer to, or execute and 1,420
deliver a new certificate to, the survivor or survivors. 1,421
(E) Whenever a corporation has determined that any 1,423
outstanding certificates for shares should be canceled and 1,424
exchanged for other certificates, the corporation may order and 1,425
require the holders of the outstanding certificates to surrender 1,426
them for such THAT purpose within a reasonable time to be fixed 1,427
by the corporation. Such THE order may provide that, until 1,428
compliance therewith WITH THE ORDER, any or all rights as a 1,430
shareholder of the holder of any certificate so required to be 1,432
surrendered shall be suspended with respect to the shares 1,433
represented thereby BY THE CERTIFICATE. Not less than ten days 1,435
before any such THE order is to become effective, the corporation 1,436
shall give notice thereof OF THE ORDER by mail to each 1,437
shareholder affected thereby BY THE ORDER at his THE 1,438
SHAREHOLDER'S address as it appears on the records of the 1,440
corporation.
(F) Unless otherwise provided by the articles or 1,442
regulations, the directors may provide by resolution that some or 1,443
all of any or all classes and series of shares of a corporation 1,444
33
shall be uncertificated shares, provided that such THE resolution 1,446
shall not apply to shares represented by a certificate until such 1,447
THE certificate is surrendered to the corporation and that such 1,450
THE resolution shall not apply to a certificated security issued 1,451
in exchange for an uncertificated security. Within a reasonable 1,453
time after the issuance or transfer of uncertificated shares, the 1,454
corporation shall send to the registered owner thereof OF THE 1,455
SHARES a written notice containing the information required to be 1,456
set forth or stated on certificates pursuant to division (A) of 1,458
section 1701.25 of the Revised Code. Except as otherwise
expressly provided by law, the rights and obligations of the 1,460
holders of uncertificated shares and the rights and obligations 1,461
of the holders of certificates representing shares of the same 1,462
class and series shall be identical. 1,463
Sec. 1701.33. The directors may declare dividends and 1,472
distributions on outstanding shares of the corporation, subject 1,473
to the following provisions: 1,474
(A) A dividend or distribution may be paid in cash, 1,476
property, or shares of the corporation. The dividend or 1,477
distribution shall not exceed the combination of the surplus of 1,478
the corporation and the difference between the following: 1,479
(1) The reduction in surplus that results from the 1,481
immediate recognition of the transition obligation under 1,482
statement of financial accounting standards no. 106 (SFAS no. 1,483
106), issued by the financial accounting standards board; 1,484
(2) The aggregate amount of the transition obligation that 1,486
would have been recognized as of the date of the declaration of a 1,487
dividend or distribution if the corporation had elected to 1,488
amortize its recognition of the transition obligation under 1,489
statement of financial accounting standards no. 106. 1,490
(B) A dividend or distribution may be paid in treasury 1,492
shares or in authorized but unissued shares. If paid in shares 1,493
with par value, there shall be transferred from any surplus, 1,494
however created, to stated capital, such THE amount, if any, as 1,496
34
THAT is necessary in order that the stated capital represented by 1,497
the outstanding shares with par value, after giving effect to 1,498
such THE dividend or distribution, will be equal to the aggregate 1,499
par value of such THE shares, or, if the directors so determine, 1,500
a greater amount shall be so transferred. If paid in shares 1,501
without par value, there shall be transferred from any surplus, 1,502
however created, to stated capital, only such THE amount, if any, 1,504
as THAT the directors determine. 1,505
(C) No dividend or distribution shall be paid to the 1,507
holders of shares of any class in violation of the rights of the 1,508
holders of shares of any other class, or when the corporation is 1,509
insolvent or there is reasonable ground to believe that by such 1,510
payment it would be rendered insolvent;. 1,511
(D) No dividend or distribution on shares of any class 1,513
shall be paid in shares of another class if any of the authorized 1,514
shares of such THE latter class are already outstanding, unless 1,515
either the articles so provide or such THE payment is authorized 1,516
by the affirmative vote of the holders of at least two-thirds of 1,518
the shares of the class in which payment is to be made;. 1,519
(E) If the articles of a corporation engaged in whole or 1,521
in part in the exploitation of mines, timber, oil wells, gas 1,522
wells, quarries, or other natural resources so provide, the 1,523
corporation may compute its surplus for the purpose of paying 1,524
dividends and distributions without making any deduction or 1,525
allowance for the depletion of such assets incidental to the 1,526
exploitation and sale of them;. 1,527
(F) When any portion of a dividend or distribution is paid 1,529
out of capital surplus, the corporation, at the time of paying 1,530
the same DIVIDEND OR DISTRIBUTION, shall notify the shareholders 1,531
receiving the same DIVIDEND OR DISTRIBUTION as to the kind of 1,532
surplus out of which the dividend OR DISTRIBUTION is paid. 1,533
(G) When a dividend or distribution is to be paid in 1,535
authorized but unissued shares of the corporation, the directors 1,536
may provide that such THE dividend or distribution shall also be 1,537
35
paid on treasury shares of the same class. 1,539
(H) THE EFFECT OF A DIVIDEND OR DISTRIBUTION IS MEASURED 1,542
AS OF THE DATE THE DIVIDEND OR DISTRIBUTION IS AUTHORIZED IF THE 1,543
PAYMENT OCCURS ONE HUNDRED TWENTY DAYS OR LESS AFTER THE DATE OF 1,544
AUTHORIZATION OR AS OF THE DATE THE PAYMENT IS MADE IF IT OCCURS 1,545
MORE THAN ONE HUNDRED TWENTY DAYS AFTER THE DATE OF 1,546
AUTHORIZATION. IF A CORPORATION PAYS A DIVIDEND OR DISTRIBUTION 1,547
BY DELIVERING AN OBLIGATION OR OTHER EVIDENCE OF INDEBTEDNESS, 1,548
THE DATE OF THE DELIVERY IS THE DATE UPON WHICH THE EFFECT OF THE 1,549
DIVIDEND OR DISTRIBUTION IS MEASURED. 1,550
(I) A CORPORATION'S INDEBTEDNESS TO A SHAREHOLDER INCURRED 1,553
BY REASON OF A DIVIDEND OR DISTRIBUTION MADE IN ACCORDANCE WITH 1,554
THIS SECTION IS AT PARITY WITH THE CORPORATION'S INDEBTEDNESS TO 1,555
ITS GENERAL, UNSECURED CREDITORS, EXCEPT TO THE EXTENT 1,556
SUBORDINATED BY AGREEMENT. 1,557
Sec. 1701.45. (A) For any lawful purpose, including, 1,566
without limitation, the determination of the shareholders who are 1,567
entitled to: (1) TO receive notice of or to vote at a meeting of 1,569
shareholders; (2) TO receive payment of any dividend or 1,571
distribution; (3) TO receive or exercise rights of purchase of or
subscription for, or exchange or conversion of, shares or other 1,572
securities, subject to contract rights with respect thereto TO 1,573
THE SHARES OR SECURITIES; or (4) TO participate in the execution 1,575
of written consents, waivers, or releases; the directors may fix
a record date which shall not be a date earlier than the date on 1,576
which the record date is fixed and, in the cases provided for in 1,577
clauses (1), (2) and (3) above, shall not be more than sixty 1,578
days, unless the articles or the regulations specify a shorter or 1,579
a longer period for such THAT purpose, preceding the date of the 1,581
meeting of the shareholders, or the date fixed for the payment of 1,582
any dividend or distribution, or the date fixed for the receipt
or the exercise of rights, as the case may be. 1,583
(B) If a meeting of the shareholders is called by persons 1,585
entitled to call the same, MEETING or action is taken by 1,586
36
shareholders without a meeting, and if the directors fail or 1,588
refuse, within such THE time as THAT the persons calling such THE 1,590
meeting or initiating such other action may request, to fix a 1,591
record date for the purpose of clause (1) or (4) of division (A) 1,593
of this section, then the persons calling such THE meeting or 1,594
initiating such other action may fix a record date for such 1,596
purpose EITHER OF THOSE PURPOSES, subject to the limitations set 1,598
forth in division (A) of this section.
(C) The record date for the purpose of clause (1) of 1,600
division (A) of this section shall continue to be the record date 1,601
for all adjournments of such meeting, unless the directors or the 1,602
persons who shall have fixed the original record date shall, 1,604
subject to the limitations set forth in division (A) of this 1,606
section, fix another RECORD date, and in case a new record date
is so fixed, notice thereof OF THE RECORD DATE and of the date to 1,608
which the meeting shall have HAS been adjourned shall be given to 1,610
shareholders of record as of said THAT date in accordance with 1,611
the same requirements as those applying to a meeting newly
called. 1,612
(D) The directors may close the share transfer books 1,614
against transfers of shares during the whole or any part of the 1,615
period provided for in division (A) above OF THIS SECTION, 1,616
including the date of the meeting of the shareholders and the 1,617
period ending with the date, if any, to which THE MEETING IS 1,618
adjourned.
(E) If no record date is fixed therefor, the record date 1,620
for determining the shareholders who are entitled to receive 1,622
notice of, or who are entitled to vote at, a meeting of 1,623
shareholders, shall be the date next preceding the day on which 1,625
notice is given, or the date next preceding the day on which the
meeting is held, as the case may be. 1,626
(F) The record date for a change of shares shall be the 1,628
time when the certificate of amendment or of amended articles 1,629
effecting such THE change is filed in the office of the secretary 1,631
37
of state.
(G) IF THE DIRECTORS DO NOT FIX A RECORD DATE FOR 1,634
DETERMINING SHAREHOLDERS ENTITLED TO PAYMENT OF ANY DIVIDEND OR 1,635
DISTRIBUTION, THE RECORD DATE IS THE DATE THAT THE DIRECTORS 1,636
AUTHORIZE THE DIVIDEND OR DISTRIBUTION.
Sec. 1701.59. (A) Except where the law, the articles, or 1,645
the regulations require action to be authorized or taken by 1,646
shareholders, all of the authority of a corporation shall be 1,647
exercised by or under the direction of its directors. For their 1,648
own government, the directors may adopt bylaws that are not 1,649
inconsistent with the articles or the regulations. The selection 1,650
of a time frame for the achievement of corporate goals shall be 1,651
the responsibility of the directors. 1,652
(B) A director shall perform his THE DIRECTOR'S duties as 1,654
a director, including his THE duties as a member of any committee 1,656
of the directors upon which he THE DIRECTOR may serve, in good 1,657
faith, in a manner he THE DIRECTOR reasonably believes to be in 1,659
or not opposed to the best interests of the corporation, and with 1,660
the care that an ordinarily prudent person in a like position 1,661
would use under similar circumstances. In performing his A 1,662
DIRECTOR'S duties, a director is entitled to rely on information, 1,664
opinions, reports, or statements, including financial statements 1,665
and other financial data, that are prepared or presented by ANY 1,666
OF THE FOLLOWING:
(1) One or more directors, officers, or employees of the 1,668
corporation who the director reasonably believes are reliable and 1,669
competent in the matters prepared or presented; 1,670
(2) Counsel, public accountants, or other persons as to 1,672
matters that the director reasonably believes are within the 1,673
person's professional or expert competence; 1,674
(3) A committee of the directors upon which he THE 1,676
DIRECTOR does not serve, duly established in accordance with a 1,678
provision of the articles or the regulations, as to matters 1,679
within its designated authority, which committee the director 1,680
38
reasonably believes to merit confidence. 1,681
(C) For purposes of division (B) of this section, THE 1,683
FOLLOWING APPLY: 1,684
(1) A director shall not be found to have violated his THE 1,686
DIRECTOR'S duties under division (B) of this section unless it is 1,688
proved by clear and convincing evidence that the director has not 1,689
acted in good faith, in a manner he THE DIRECTOR reasonably 1,690
believes to be in or not opposed to the best interests of the 1,692
corporation, or with the care that an ordinarily prudent person 1,693
in a like position would use under similar circumstances, in any 1,694
action brought against a director, including actions involving or 1,695
affecting any of the following: 1,696
(a) A change or potential change in control of the 1,698
corporation, including a determination to resist a change or 1,699
potential change in control made pursuant to division (F)(7) of 1,700
section 1701.13 of the Revised Code; 1,701
(b) A termination or potential termination of his THE 1,703
DIRECTOR'S service to the corporation as a director; 1,705
(c) His THE DIRECTOR'S service in any other position or 1,707
relationship with the corporation. 1,709
(2) A director shall not be considered to be acting in 1,711
good faith if he THE DIRECTOR has knowledge concerning the matter 1,713
in question that would cause reliance on information, opinions, 1,714
reports, or statements that are prepared or presented by the 1,715
persons described in divisions (B)(1) to (3) of this section to 1,716
be unwarranted. 1,717
(3) Nothing contained in this division limits relief 1,719
available under section 1701.60 of the Revised Code. 1,720
(D) A director shall be liable in damages for any action 1,722
he THAT THE DIRECTOR takes or fails to take as a director only if 1,724
it is proved by clear and convincing evidence in a court of 1,726
competent jurisdiction that his THE DIRECTOR'S action or failure 1,727
to act involved an act or omission undertaken with deliberate 1,729
intent to cause injury to the corporation or undertaken with 1,730
39
reckless disregard for the best interests of the corporation. 1,731
Nothing contained in this division affects the liability of 1,732
directors under section 1701.95 of the Revised Code or limits 1,733
relief available under section 1701.60 of the Revised Code. This 1,734
division does not apply if, and only to the extent that, at the 1,735
time of a director's act or omission that is the subject of 1,736
complaint, the articles or the regulations of the corporation 1,737
state by specific reference to this division that the provisions 1,738
of this division do not apply to the corporation.
(E) For purposes of this section, a director, in 1,740
determining what he THE DIRECTOR reasonably believes to be in the 1,742
best interests of the corporation, shall consider the interests 1,743
of the corporation's shareholders and, in his THE DIRECTOR'S 1,744
discretion, may consider any of the following: 1,746
(1) The interests of the corporation's employees, 1,748
suppliers, creditors, and customers; 1,749
(2) The economy of the state and nation; 1,751
(3) Community and societal considerations; 1,753
(4) The long-term as well as short-term interests of the 1,755
corporation and its shareholders, including the possibility that 1,756
these interests may be best served by the continued independence 1,757
of the corporation. 1,758
(F) Nothing contained in division (C) or (D) of this 1,760
section affects the duties of either of the following: 1,761
(1) A director who acts in any capacity other than his THE 1,764
DIRECTOR'S capacity as a director; 1,765
(2) A director of a corporation that does not have issued 1,767
and outstanding shares that are listed on a national securities 1,768
exchange or are regularly quoted in an over-the-counter market by 1,769
one or more members of a national or affiliated securities 1,770
association, who votes for or assents to any action taken by the 1,771
directors of the corporation that, in connection with a change in 1,772
control of the corporation, directly results in the holder or 1,773
holders of a majority of the outstanding shares of the 1,774
40
corporation receiving a greater consideration for their shares 1,775
than other shareholders. 1,776
Sec. 1701.63. (A) The regulations may provide for the 1,785
creation by the directors of an executive committee or any other 1,786
committee of the directors, to consist of one or more directors, 1,788
and may authorize the delegation to any such committee of any of 1,789
the authority of the directors, however conferred, other than the 1,790
authority of filling vacancies among the directors or in any 1,791
committee of the directors.
(B) The directors may appoint one or more directors as 1,793
alternate members of any such committee DESCRIBED IN DIVISION (A) 1,795
OF THIS SECTION, who may take the place of any absent member or 1,796
members at any meeting of the particular committee. 1,797
(C) Each such committee DESCRIBED IN DIVISION (A) OF THIS 1,799
SECTION shall serve at the pleasure of the directors, shall act 1,801
only in the intervals between meetings of the directors, and 1,802
shall be subject to the control and direction of the directors. 1,803
(D) Unless otherwise provided in the regulations or 1,805
ordered by the directors, any such committee DESCRIBED IN 1,806
DIVISION (A) OF THIS SECTION may act by a majority of its members 1,808
at a meeting or by a writing or writings signed by all of its 1,809
members.
(E) Unless participation by members of any such committee 1,811
DESCRIBED IN DIVISION (A) OF THIS SECTION at a meeting by means 1,813
of communications equipment is prohibited by the articles, the 1,814
regulations, or an order of the directors, meetings of the 1,815
particular committee may be held through any communications 1,816
equipment if all persons participating can hear each other. 1,817
Participation in a meeting pursuant to this division constitutes 1,818
presence at the meeting.
(F) An act or authorization of an act by any such 1,820
committee DESCRIBED IN DIVISION (A) OF THIS SECTION within the 1,821
authority delegated to it shall be as effective for all purposes 1,823
as the act or authorization of the directors. 1,824
41
Sec. 1701.70. (A) If an initial stated capital is not set 1,833
forth DIRECTORS ARE NOT NAMED in the articles, then before the 1,834
corporation begins business, or if an initial stated capital is 1,836
set forth in the articles, then before subscriptions to shares 1,837
have been received in the amount of that initial stated capital, 1,838
AND BEFORE THE INCORPORATORS HAVE ELECTED DIRECTORS, the 1,840
incorporators may adopt an amendment to the articles by a writing
signed by them. IF INITIAL DIRECTORS ARE NAMED IN THE ARTICLES, 1,841
OR IF THE INCORPORATORS HAVE ELECTED DIRECTORS AND HAVE NOT 1,842
RECEIVED SUBSCRIPTIONS, THEN BEFORE SUBSCRIPTIONS TO SHARES HAVE 1,843
BEEN RECEIVED, THE DIRECTORS MAY ADOPT AN AMENDMENT TO THE 1,844
ARTICLES.
(B) The directors may adopt an amendment to the articles 1,846
in the following cases: 1,847
(1) When and to the extent authorized by the articles, the 1,849
directors may adopt an amendment in respect of any unissued or 1,850
treasury shares of any class; DETERMINING, IN WHOLE OR IN PART, 1,851
THE EXPRESS TERMS, WITHIN THE LIMITS SET FORTH IN THIS CHAPTER, 1,852
OF ANY CLASS OF SHARES BEFORE THE ISSUANCE OF ANY SHARES OF THAT 1,853
CLASS, OR OF ONE OR MORE SERIES WITHIN A CLASS BEFORE THE 1,854
ISSUANCE OF SHARES OF THAT SERIES.
(2) When the corporation shall have HAS issued shares or 1,856
obligations convertible into shares of the corporation, or shall 1,857
have HAS granted options to purchase any shares, and such THE 1,859
conversion or option rights are set forth in the articles or have 1,860
been approved by the same vote of shareholders as, at the time of 1,861
such THE approval, would have been required to amend the articles 1,863
to authorize the shares required for such THAT purpose, and the 1,864
corporation does not have sufficient authorized but unissued 1,865
shares to satisfy such THOSE conversion or option rights, the 1,866
directors may adopt an amendment to authorize such THE shares;. 1,869
(3) Whenever shares of any class have been redeemed, or 1,871
have been surrendered to or acquired by the corporation upon 1,872
conversion, exchange, purchase, or otherwise, the directors may 1,873
42
adopt an amendment to reduce the authorized number of shares of 1,874
such THE class by the number so redeemed, surrendered, or 1,875
acquired; and when all of the authorized shares of a class have 1,877
been redeemed, or surrendered to or acquired by the corporation, 1,878
the directors may adopt an amendment to eliminate from the 1,879
articles all references to the shares of such THE class and to 1,880
make such other appropriate changes as THAT are required by such 1,882
THE elimination;. 1,883
(4) When articles have been amended and any change of 1,885
issued or unissued shares provided for in the amendment or 1,886
amended articles shall have HAS become effective, the directors 1,887
may adopt an amendment to eliminate from the articles all 1,889
references to the change of shares and to make such ANY other 1,890
appropriate changes as THAT are required by such THE elimination; 1,892
however, such an amendment to articles THAT IS SO adopted by the 1,893
directors shall contain a statement with respect to the 1,895
authorized number and the par value, if any, of the shares of 1,896
each class.
(5) After a merger or consolidation, in which the 1,898
surviving or new corporation is a domestic corporation, shall 1,899
have become BECOMES effective, the directors may adopt an 1,900
amendment: 1,901
(a) To eliminate from the articles any statement or 1,903
provision pertaining exclusively to the merger or consolidation, 1,904
or that was required to be set forth in the agreement of merger 1,906
or consolidation and that would not be required in original 1,908
articles or amendments to articles filed at the time the 1,909
statement or provision was adopted;
(b) To make such ANY other appropriate changes required by 1,911
that elimination. 1,912
An amendment to articles adopted by the directors under 1,914
division (B)(5) of this section need not contain or continue any 1,915
statement with respect to the amount of stated capital. 1,916
(C) IF A VOTE ON THE ADOPTION OF AN AMENDMENT IS REQUIRED 1,919
43
BY DIVISION (B)(4) OF SECTION 1701.71 OF THE REVISED CODE, ANY 1,920
AMENDMENT TO THE ARTICLES ADOPTED PURSUANT TO DIVISION (B) OF 1,921
THIS SECTION THAT CREATES A CLASS OR SERIES OF SHARES THE EXPRESS 1,922
TERMS OF WHICH PROVIDE FOR THE CONVERTIBILITY OF THE SHARES INTO 1,923
SHARES OF ANOTHER CLASS SHALL ALSO REQUIRE THE APPROVAL OF THE 1,924
HOLDERS, VOTING AS A CLASS, OF ANY ISSUED AND OUTSTANDING SHARES 1,925
INTO WHICH THE SHARES MAY BE CONVERTED. 1,926
Sec. 1701.71. (A)(1) Except as otherwise provided in this 1,935
division or division (A)(2) of this section, the shareholders, at 1,936
a meeting held for such THAT purpose, may adopt an amendment, 1,937
including any AMENDMENT that could be adopted by the directors, 1,938
by the affirmative vote of the holders of shares entitling them 1,939
to exercise two-thirds of the voting power of the corporation on 1,940
the proposal or, if the articles provide or permit, by the 1,941
affirmative vote of a greater or lesser proportion, but not less 1,942
than a majority, of such voting power, and by such THE 1,943
affirmative vote of the holders of shares of any particular class 1,945
as THAT is required by the articles. If, at the time an 1,946
amendment to eliminate cumulative voting rights permitted by 1,947
division (B)(10) of section 1701.69 of the Revised Code is acted 1,948
upon by the shareholders, a corporation does not have issued and 1,949
outstanding shares that are listed on a national securities 1,950
exchange or are regularly quoted in an over-the-counter market by 1,951
one or more members of a national or affiliated securities 1,952
association, that amendment shall not be adopted if the votes of 1,953
a sufficient number of shares are cast against the amendment 1,954
that, if cumulatively voted at an election of all the directors, 1,955
or all the directors of a particular class, as the case may be, 1,956
would at the time the amendment is acted upon by the shareholders 1,957
be sufficient to elect at least one director. 1,958
(2) Whenever under division (B) of this section the 1,960
holders of shares of any particular class are entitled to vote as 1,961
a class on the adoption of an amendment, such THE amendment, in 1,962
order to be adopted, must receive the affirmative vote of the 1,963
44
holders of at least two-thirds OF THE SHARES OF THAT CLASS or, if 1,964
the articles provide or permit, a greater or lesser proportion, 1,966
but not less than a majority, of the shares of such THAT class. 1,967
If the proposed amendment would authorize any particular 1,968
corporate action that, under any applicable provision of law or 1,969
under the existing articles, could be authorized only by or 1,970
pursuant to a specified vote of shareholders, such THE amendment, 1,971
in order to be adopted, must receive the affirmative vote so 1,972
specified.
(B) Regardless of limitations or restrictions in the 1,974
articles on the voting rights of the shares of any class, the 1,975
holders of shares of a particular class, and in the cases 1,976
specified in divisions (B)(6), (7), and (8) of this section the 1,977
holders of shares of every class, shall be entitled to vote as a 1,978
class on the adoption of an amendment that does any of the 1,979
following: 1,980
(1) Increases or decreases the par value of the issued 1,982
shares of the particular class; 1,983
(2) Changes issued shares of the particular class, whether 1,985
with or without par value, into a lesser number of shares of the 1,986
same class or into the same or a different number of shares of 1,987
any other class, with or without par value, theretofore 1,988
PREVIOUSLY or then authorized; 1,990
(3) Changes the express terms, or adds express terms, of 1,992
the shares of the particular class in any manner substantially 1,993
prejudicial to the holders of the shares; 1,994
(4) Changes the express terms of issued shares of any 1,996
class senior to the particular class in any manner substantially 1,997
prejudicial to the holders of shares of the particular class; 1,998
(5) Authorizes shares of another class that are 2,000
convertible into, or authorizes the conversion of shares of 2,001
another class into, shares of the particular class, or authorizes 2,002
the directors to fix or alter conversion rights of shares of 2,003
another class that are convertible into shares of the particular 2,004
45
class; PROVIDED, HOWEVER, BOTH OF THE FOLLOWING APPLY: 2,005
(a) THE FAILURE TO OBTAIN THE SHAREHOLDERS' APPROVAL ONLY 2,008
PREVENTS THE CONVERSION OF THE SHARES UNTIL THE SHAREHOLDERS'
APPROVAL IS OBTAINED AND DOES NOT OTHERWISE AFFECT THE 2,009
AUTHORIZATION OR ANY OTHER EXPRESS TERMS OF THE SHARES; 2,010
(b) THE ARTICLES MAY PROVIDE THAT NO VOTE OF THE HOLDERS 2,013
OF COMMON SHARES, AS A CLASS, IS REQUIRED IN CONNECTION WITH THE 2,014
AUTHORIZATION OF SHARES OF ANY CLASS THAT ARE CONVERTIBLE INTO 2,015
COMMON SHARES.
(6) Provides, in the case of an amendment described in 2,017
division (B)(1) or (2) of this section, that the stated capital 2,018
of the corporation shall be reduced or eliminated as a result of 2,019
the amendment, or provides, in the case of an amendment described 2,020
in division (B)(5) of this section, that the stated capital of 2,021
the corporation shall be reduced or eliminated upon the exercise 2,022
of such conversion rights, provided that any such reduction or 2,023
elimination is consistent with section 1701.30 of the Revised 2,024
Code; 2,025
(7) Changes substantially the purposes of the corporation, 2,027
or provides that thereafter an A SUBSEQUENT amendment to the 2,028
articles may be adopted that changes substantially the purposes 2,030
of the corporation; 2,031
(8) Changes a corporation into a nonprofit corporation. 2,033
(C) An amendment that changes a corporation into a 2,035
nonprofit corporation shall contain a statement of purposes 2,036
proper in the case of a nonprofit corporation, and a statement 2,037
that, after the effective date of the amendment, the corporation 2,038
shall be subject to the provisions of the Revised Code relating 2,039
to nonprofit corporations. In the case of a corporation formed 2,040
on or after June 9, 1927, the amendment also shall provide for 2,041
the cancellation of all outstanding shares and the terms and 2,042
considerations, if any, for such THE cancellation. In the case 2,043
of a corporation formed prior to June 9, 1927, the amendment may 2,044
provide for such THE cancellation of outstanding shares, but if 2,045
46
it does not so provide, the amendment shall contain a provision 2,046
forbidding the payment of dividends or distributions on any 2,047
shares after the effective date of the amendment. 2,048
Sec. 1701.95. (A)(1) In addition to any other liabilities 2,057
imposed by law upon directors of a corporation and except as 2,058
provided in division (B) of this section, directors shall be 2,059
jointly and severally liable to the corporation as provided in 2,060
division (A)(2) of this section if they vote for or assent to any 2,061
of the following: 2,062
(a) The payment of a dividend or distribution, the making 2,064
of a distribution of assets to shareholders, or the purchase or 2,065
redemption of the corporation's own shares, contrary to law or 2,066
the articles;
(b) A distribution of assets to shareholders during the 2,068
winding up of the affairs of the corporation, on dissolution or 2,069
otherwise, without the payment of all known obligations of the 2,070
corporation or without making adequate provision for their 2,071
payment; 2,072
(c) The making of a loan, other than in the usual course 2,074
of business, to an officer, director, or shareholder of the 2,075
corporation, other than in either of the following cases: 2,076
(i) In the case of a savings and loan association or of a 2,078
corporation engaged in banking or in the making of loans 2,079
generally; 2,080
(ii) At the time of the making of the loan, a majority of 2,082
the disinterested directors of the corporation voted for the loan 2,083
and, taking into account the terms and provisions of the loan and 2,084
other relevant factors, determined that the making of the loan 2,085
could reasonably be expected to benefit the corporation. 2,086
(2)(a) In cases under division (A)(1)(a) of this section, 2,088
directors shall be jointly and severally liable up to the amount 2,089
of the dividend, distribution, or other payment, in excess of the 2,090
amount that could have been paid or distributed without violation 2,091
of law or the articles but not in excess of the amount that would 2,092
47
inure to the benefit of the creditors of the corporation if it 2,093
was insolvent at the time of the payment or distribution or there 2,094
was reasonable ground to believe that by that action it would be 2,095
rendered insolvent, plus the amount that was paid or distributed 2,096
to holders of shares of any class in violation of the rights of 2,097
holders of shares of any other class. 2,098
(b) In cases under division (A)(1)(b) of this section, 2,100
directors shall be jointly and severally liable to the extent 2,101
that the obligations of the corporation that are not otherwise 2,102
barred by statute are not paid or for the payment of which 2,103
adequate provision has not been made. 2,104
(c) In cases under division (A)(1)(c) of this section, 2,106
directors shall be jointly and severally liable for the amount of 2,107
the loan with interest on it at the rate specified in division 2,109
(A) of section 1343.03 of the Revised Code until the amount has 2,110
been paid.
(B)(1) A director is not liable under division (A)(1)(a) 2,112
or (b) of this section if THE DIRECTOR WOULD NOT BE LIABLE UNDER 2,113
DIVISION (D) OF SECTION 1701.59 OF THE REVISED CODE OR IF, in 2,114
determining the amount available for any dividend, purchase, 2,116
redemption, or distribution to shareholders, the director in good 2,117
faith relied on a financial statement of the corporation prepared 2,119
by an officer or employee of the corporation in charge of its 2,120
accounts or certified by a public accountant or firm of public 2,121
accountants, the director in good faith considered the assets to 2,122
be of their book value, or the director followed what the 2,123
director believed to be sound accounting and business practice. 2,124
(2) A director is not liable under division (A)(1)(c) of 2,126
this section for making any loan to, or guaranteeing any loan to 2,127
or other obligation of, an employee stock ownership plan, as 2,128
defined in section 4975(e)(7) of the Internal Revenue Code. 2,129
(C) A director who is present at a meeting of the 2,131
directors or a committee of the directors at which action on any 2,132
matter is authorized or taken and who has not voted for or 2,133
48
against the action shall be presumed to have voted for the action 2,134
unless that director's written dissent from the action is filed, 2,135
either during the meeting or within a reasonable time after the 2,136
adjournment of the meeting, with the person acting as secretary 2,137
of the meeting or with the secretary of the corporation. 2,138
(D) A shareholder who knowingly receives any dividend, 2,140
distribution, or payment made contrary to law or the articles 2,141
shall be liable to the corporation for the amount received by 2,142
that shareholder that is in excess of the amount that could have 2,143
been paid or distributed without violation of law or the 2,144
articles.
(E) A director against whom a claim is asserted under or 2,146
pursuant to this section and who is held liable on the claim 2,147
shall be entitled to contribution, on equitable principles, from 2,148
other directors who also are liable. In addition, any director 2,149
against whom a claim is asserted under or pursuant to this 2,150
section or who is held liable shall have a right of contribution 2,151
from the shareholders who knowingly received any dividend, 2,152
distribution, or payment made contrary to law or the articles, 2,153
and those shareholders as among themselves also shall be entitled 2,155
to contribution in proportion to the amounts received by them 2,156
respectively. 2,157
(F) No action shall be brought by or on behalf of a 2,159
corporation upon a cause of action arising under division 2,161
(A)(1)(a) OR (b) or (2) of this section after two years from the 2,163
day on which the violation occurs.
(G) Nothing contained in this section shall preclude a 2,165
creditor whose claim is unpaid from exercising the rights that 2,167
that creditor otherwise would have by law to enforce that
creditor's claim against assets of the corporation paid or 2,168
distributed to shareholders.
(H) The failure of a corporation to observe corporate 2,170
formalities relating to meetings of directors or shareholders in 2,171
connection with the management of the corporation's affairs shall 2,172
49
not be considered a factor tending to establish that the 2,173
shareholders have personal liability for corporate obligations. 2,174
Section 2. That existing sections 1151.38, 1151.61, 2,176
1701.04, 1701.06, 1701.09, 1701.11, 1701.13, 1701.15, 1701.18, 2,177
1701.24, 1701.33, 1701.45, 1701.59, 1701.63, 1701.70, 1701.71, 2,178
and 1701.95 and section 1701.10 of the Revised Code are hereby 2,179
repealed. 2,180